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Posco Price Revisions At Home In March?
Speculation is afloat in South Korea that integrated steelmaker Posco will revise its domestic sales prices of various steel products in March, it was learned in Tokyo Tuesday. In late December last year, Posco executed domestic price adjustments (price reductions) of the product mix, effective with January 1 shipments this year. As a result, the new price structure sets high-grade products apart from commodity-grade products.

Domestic users in South Korea, though, reacted with discontent to Posco's price adjustments. Some of them even showed moves to demand more price reductions of what Posco supplies. Posco's present sales price is W480,000/ton for commodity-grade HR coils, a price level that translates into US$489/ton at an exchange rate of US$1.00-W980. By comparison, the price level is higher by as much as US$156 than the domestic price practice of China's Anshan Iron & Steel Group Corp (Ansteel) for March shipment. Ansteel's asking price is Yn3,160/ton or the equivalent of US$333/ton before tax (at an exchange rate of US$1.00-Yn8.06.)

Until now, various steel rerollers in South Korea have slashed purchases of high-priced HR coils from Posco in favor of increased HR coil imports from China. At the same time, they have reduced purchases of HR coils from Japan. For its part, Posco applies a lower price level of W450,000/ton (US$459) than commodity-grade HR coils in domestic sales of HR coils from the company's mini mill division to fight import competition. But the price level in point is still much higher than what prevails for imported HR coils.

High levels of Posco's current domestic prices will go intact by Asian standards even if China's top integrated steelmaker Baoshan Iron & Steel Co (Baosteel) revises its domestic prices upward this week for HR coils and other steel products. As a result, various customers' discontent is unlikely to subside with what Posco charges for domestic sales.

Of late, HR coil supplies on offer from China to South Korea have advanced to a level of US$400-420/ton C&F. By comparison, though, Posco's present domestic prices for HR coils still stand at a high level.

Under the circumstances, speculation is afloat in South Korea that Posco may take the plunge and revise its domestic sales prices of various steel products in March. There are suggestions that a more price reduction of at least W50,000/ton (US$51) may be necessary to HR coils.

In this connection, if Posco has held down what the company charges for heavy plates as well, it could have a certain influence on Japanese integrated steelmakers' ship plate exports under negotiation with South Korea's major shipbuilding companies for shipments in April-September 2006, market sources forecast.
last modified : Mon 27 Feb, 2006 [10:39]
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